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The four warning signs of low Organisational Health

Tom Leary by Tom Leary

The four warning signs of low Organisational Health

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“Real organisational health takes an integrated view. It brings together strategy, organisational design and culture together, using a skilful balance of art and science.”

As we emerge out of the pandemic and into a new working world, leaders must consider how they actively work to strengthen the individual and collective resilience of their teams against unprecedented change. Whilst previously overlooked, employee wellbeing now serves as a focal point for many leaders who have realised just how important culture is when it comes to the survival and organisational health of their business.

Beyond the relationships, politics and culture of the people, organisations must also consider the operating models, structures, and processes which they operate under. Healthy organisations require change being introduced and implemented properly against the right challenges. It is the skilful integration between the intangible and tangible elements which enable this.

 

So, where do you start when it comes to assessing the health of your organisation? Firstly, a current-state assessment should be conducted to identify the gaps, pain points and opportunities for growth in your current business. Across our work with a large number of clients, we’ve identified four key indicators of low organisational health. Use this as a starting point to see how your company weighs up.

 

  1. Executive teams operating as individuals

The first warning sign is when an executive team feels more like a set of individuals. A lack of integration at this level sets the tone for siloes elsewhere. Most pronounced is when strategy build starts with each executive defining their own strategy, then the ‘Head of Strategy’ linking these into one document, with a set of individual KPIs that aren’t shared. Organisational health will only be achieved when there is one vision and the strategy is a coherent pathway to achieve the vision. Start with a clear definition of the vision and plan a joint pathway to get there one where each individual has their own responsibilities to meet the core, shared objectives.  

 

  1. Operating model design that starts with structure

One of the critical links between strategy and execution is the operating model that ultimately houses the work performed; what is done, where, how and by who. It provides solid foundation, structure and a clear way forward. There is often not enough thought put into this exercise and as a result, while financial targets are normally met in the short term, what is left is a set of issues that won’t rear their heads until later down the line… issues such as performance or cultural issues that could have been avoided.

 

 

  1. Decision making based on limited insight

Despite enterprise resource planning (ERP) systems having been around in various forms since the ‘90s, there are still many companies that — despite huge system investments — don’t have an integrated view of their business. Instead, disconnected HR and Finance data is viewed separately without a clear view of where or how work gets prioritised, delivered and results assessed. Bringing together product/service performance and activity assessment alongside people and finance information will provide a clearer understanding of what is really happening in the business and what is being delivered. It is this intersection that is key and will determine how successful business decisions are made.

 

  1. The wellbeing of the organisation is seen as the preserve of HR

The events of the past two years have moved employee wellbeing from an individual issue to a strategic business imperative. Yet few businesses are viewing people as integral to financial outcomes until this point. There was talk, but little real strategic action. Foresight needs integrated data and the right questions being asked to gain valuable insight. Clearly wellbeing and psychological safety will continue to be key business issue in 2022 and the number one priority on the business continuity agenda. They are fundamental precursors to performance and staff retention. Check this is coming out of the HR silo and is an integral part of the leadership conversation.

 

If you’re interested in learning more about how to drive organisational health in 2022, we’ve created a five-point checklist of actions for leaders to start implementing in their current business. You can download this below, or read Tom’s Smart Company article here: https://www.smartcompany.com.au/plus/improving-organisational-health/

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